Moscow, Russia– 27 November 2019 – Sistema PJSFC (“Sistema” or the “Company”, together with its subsidiaries, “the Group”) (LSE: SSA, MOEX: AFKS), a publicly-traded diversified Russian holding company, today announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter ended 30 September 2019.

SUCCESSFUL DELIVERY AGAINST STRATEGIC AND OPERATIONAL GOALS

• Sustained revenue growth[1] due to strong results from the majority of portfolio companies.
• OIBDA growth driven by contributions from both private and publicly traded subsidiaries.
• Reduction of net financial liabilities at the Corporate Centre by 6.9% year-on-year to RUB 199.0 billion.
• Successful public offering of Detsky Mir shares, with the proceeds of RUB 12.5 billion. In November 2019 Sistema and the Russia-China Investment Fund (RCIF) sold 175 million shares in Detsky Mir at RUB 91 per share. Sistema retained a stake in Detsky Mir of 33.4% and the RCIF retained a stake of 9.0%. The offering has substantially increased the free float of Detsky Mir, which should enhance liquidity for the benefit of all shareholders. The proceeds from the transaction will allow Sistema to continue deleveraging and enhance its investment resources.
• Merger of assets and expanded presence in the pharmaceuticals business. In August 2019 Sistema completed the acquisition of stakes in Sintez and Biocom. Together with Alium – a pharmaceuticals company created through the merger of OBL Pharm and Binnopharm - the acquired companies will create a major market player with the potential to become a top-three Russian pharmaceuticals company in the commercial (non-state) segment. The merger of OBL Pharm and Binnopharm under the Alium brand was completed in October 2019. As a result of the merger, Sistema holds an effective stake of 26.3% in Alium.
• Creation of a leading residential real estate developer in Moscow and St Petersburg. In August 2019 Sistema sold a 49% equity stake in Leader Invest to Etalon Group for RUB 14.6 billion. As a result of the transaction, Etalon Group consolidated 100% ownership of Leader Invest. The transaction allowed Etalon Group to accelerate the integration of the two businesses, which will support growth of shareholder value.
• Launch of a share buyback programme in the amount up to RUB 3.0 billion in September 2019.

3Q 2019 FINANCIAL RESULTS

• Consolidated revenue increased by 6.6%1 year-on-year to RUB 214.0 billion.
• Adjusted OIBDA[2]increased by 4.4% year-on-year to RUB 75.4 billion; the adjusted OIBDA margin was 35.2%.
• Adjusted net profit attributable to Sistema was RUB 3.4 billion.

Andrey Dubovskov, President and Chief Executive Officer of Sistema, said:

“Sistema’s results for 3Q 2019 reflect the successful growth and operational efficiency of the Corporation’s portfolio companies, as well our success in deleveraging and capitalising on new attractive investment opportunities at the Corporate Centre level. Dynamic growth at MTS, Detsky Mir, Medsi, Steppe and other key assets drove Sistema’s revenue growth of 7% year-on-year in 3Q 2019.

“MTS posted high growth rates driven by revenue from mobile services as well as an increasing contribution from MTS Bank. Detsky Mir continued to strengthen its market leadership, and substantially grew like-for-like sales compared with 1Q and 2Q 2019. The company consistently demonstrates high levels of profitability while realising a significant increase in dividend payments.

“Steppe achieved double-digit growth rates and delivered record quarterly revenue of more than RUB 10 billion. Medsi also delivered double-digital revenue growth due to continued growth across all segments – Voluntary Health Insurance, Mandatory Health Insurance and individuals.

“Segezha Group’s results were impacted by challenging global markets for pulp-and-paper products. The company is implementing measures to increase operational efficiency and optimise costs.

“Rapid growth of our assets and the successful monetisation of Leader Invest supported a notable reduction in the Corporation’s leverage. In 3Q 2019, net financial liabilities at the Corporate Centre declined by 7% year-on-year as we continued to optimise the structure and repayment schedule of our debt portfolio.

“We are also continuing to invest in attractive projects on the Russian and global markets through our funds platform. Since the start of 3Q 2019 the Corporation’s venture funds have participated in funding rounds for Geosplit, a developer of marker diagnostics for the oil and gas industry, as well as SenSat, a company using AI to create digital models of real-world locations.

“In line with our strategy, we are continuing to work on effective monetisations of the Corporation’s investments. In November we successfully completed a public offering of shares in Detsky Mir, raising RUB 12.5 billion. We launched this offering with an aim to enhance liquidity of Detsky Mir shares by increasing free float. The offering attracted strong interest both in Russia and globally from investors drawn by Detsky Mir’s outstanding financial and operational profile. As Sistema will remain a significant shareholder, we affirm our commitment to Detsky Mir’s strategic development and leadership team. We intend to use the proceeds from the transaction for further deleveraging and for new investments.”

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Conference call information

Sistema’s management will host a conference call today at 9:00 am (New York time) / 2:00 pm (London time) / 3:00 pm (CET) / 5:00 pm (Moscow time) to present and discuss the 3Q 2019 results.

To participate in the conference call, please dial:

Russia

+7 495 646 9190

8 10 8002 8675011 (toll-free)

UK

+44 330 336 9411

0800 279 7204 (toll-free)

US

+1 929 477 0402

888 254 3590 (toll-free)

Conference ID: 2961229

Link to webcast: https://webcasts.eqs.com/sistema20191127

Or quote the conference call title: “Sistema Third Quarter 2019 Financial Results”.

A replay of the conference call will be available on Sistema’s website www.sistema.comfor at least seven days after the event.

For further information, please visit www.sistema.comor contact:

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[1]Here and hereafter the results for 3Q 2019 and 9M 2019 are presented to reflect the reclassification of Leader Invest and RTI’s microelectronics business as discontinued operations.

[2]Here and hereafter see Appendix A for definitions and reconciliations of adjusted OIBDA, adjusted operating income, adjusted net profit attributable to Sistema, consolidated debt and consolidated net debt with IFRS financial data.